Friday, February 6, 2009

Slowdown forces Nasscom to lower export growth target this fiscal

Slowdown forces Nasscom to lower export growth target this fiscal

India’s IT and BPO export revenue would grow only 16-17 per cent during FY09 to $47 billion as against close to $50 billion estimated at the beginning of the fiscal. The cut in annual forecast by Nasscom comes on the back of global economic turmoil and tighter IT spends. The export revenue stood at $40.4 billion during FY08.
Nasscom had stated earlier that total software and service revenue (domestic and exports combined) will grow by 21-24 per cent in FY09. Now with the financial meltdown taking its toll, the software and services revenue outlook has been revised downwards – it is expected to touch $60 billion, as opposed to $62-64 billion anticipated earlier.
More importantly, the much-touted target that the industry had set for itself – of touching $60 billion exports by FY10 – too has been pushed back. IT and BPO exports are slated to hit $60-62 billion mark in FY11.
Commenting on the revised numbers, Mr Som Mittal, President of Nasscom, said, “India offers the best solution to manage resources and IT budgets and improve competitiveness, even in today’s difficult environment.
“However, factoring the impact of the global economic crisis in the second half of 2008-09, the industry is expected to grow by 16-17 per cent by March 2009. Also, the cross-currency fluctuation – dollar’s appreciation against the pound and euro – has shaved-off nearly 2.2 per cent growth from the export growth figures.”
Nasscom denied that there were any large-scale lay-offs in the IT and BPO sector, and emphasised that the industry remained a “net hirer”. The direct employment in Indian IT and BPO industry is estimated to touch 2.23 million employees (2 million in FY08); indirect job creation is estimated at nearly 8 million.
“The net addition will continue to take place and campus offers have already been made. In fact, the industry would do one lakh in net hiring in the next one year,” Nasscom Chairman, Mr Ganesh Natarajan, said, adding even in case of poor performance by certain employees, companies were offering outplacement services or retaining employees on training albeit with lower wages.

Nasscom said after recording a 24 per cent growth in the first half of 2008-09, the second half performance was impacted by the global economic downturn. Additional headwinds included cross-currency fluctuations, terror attacks and issues on corporate governance (in the aftermath of Satyam incident) and US elections.
It said that the domestic IT and BPO in FY2009 are expected to grow at nearly 20 per centand over 40 per cent respectively.
The BPO export is estimated to grow 17.5 per cent to $12.8 billion in FY09; IT services export 16.5 per cent to $26.9 billion; and Software products and engineering services at 14.4 per cent to $7.3 billion.
“BPO will be the driving engine as the end to end requirements which are non-discretionary in nature ill need to be serviced even in a downturn,” Mr Pramod Bhasin, Vice-Chairman of Nasscom and President and CEO of Genpact said.
Economic uncertainty: Pointing at the uncertain demand environment, Nasscom said that the worldwide IT spending growth is expected to come down in 2009, and that the wait and watch stance of buyers was delaying decision-making. “The industry is taking measures such as enhancing productivity levels and higher utilisation of resources for greater cost efficiency,” Nasscom added.

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